by Dawn Kawamoto
January 8, 2009 12:07 PM PST

Update at 1:39 p.m. PST, with Yahoo comment. Despite Wall Street's wrath that ensued following the failed Microsoft buyout bid, people familiar with Yahoo's CEO search say don't count out the company's president, Sue Decker.

The executive has undergone two full rounds of in-depth interviews with Yahoo's board, according to sources. And, in executive recruiting circles, more than one in-depth interview with an internal candidate signals a strong contender, said David Nosal, CEO of executive recruiting firm Nosal Partners.

"If she has gone through two rounds of full interviews with the board, it sends the signal that she is being given strong consideration. Rarely do boards go through a second round of full interviews, unless there is something significant they see there, whether it's for an internal or external candidate," Nosal said.

A number of industry players and major Yahoo investors had discounted Decker as a viable CEO candidate for the struggling Internet search pioneer, following Microsoft's failed buyout bid of $33 a share for the company. Yahoo, which had traded at roughly $19 a share before the initial bid became public last January, closed Wednesday at $12.71 a share.